Green Economy

Links between a Green Economy and REDD+In order to sustain economic growth and increase living standards, human development must be decoupled from the unsustainable consumption of natural resources. UNEP defines a Green Economy as one that “results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”. Simply put, a Green Economy can be thought of as one which is low carbon, resource efficient and socially inclusive.

Forests play an important part in the transition to this type of economy and REDD+ can help speed up this process. Activities supported by REDD+ can be designed to:

increase income by improving the output of cultivated land;

develop new “green industries”;

promote forest-based ecotourism;

stimulate production and demand for sustainably produced soft commodities such as soy, palm oil etc.

These revenue streams increase the value of standing forests (including via REDD+ performance payments), while also helping address the drivers of deforestation by encouraging greater production on agricultural land already under cultivation.

However, other means exist for reducing deforestation. Government policies can for example be changed so as to attract private finance to support conservation, sustainable forest management and tackle illegal logging. Governments can furthermore include the value of (the multiple benefits of) forests and other natural capital in their national accounts, while companies can reflect the value of natural capital on their balance sheets. Some of the ways through which REDD+ can contribute to the transition to a Green Economy are highlighted below. Please note that the list of options provided is not exhaustive. It is also important to be aware of how external factors (such as changes in the prices of agricultural commodities, fossil fuel prices or exchange rates affecting trade) influence or stimulate governments and companies in transition towards or moving away from a more inclusive, resource efficient and low-carbon economy.

Forests provide a whole range of provisioning, regulating and cultural services for human use, which contribute to myriad economic activities. Some, like timber extraction and commercialization, are accounted for in the gross domestic product (GDP) of a country, whereas many other services – especially regulating services like water retention or cultural services – are not financially accounted for by either governments or companies.

The UN-REDD Programme is supporting its partner countries to help them understand the economic value of forest-related ecosystem services to the national economy. Studies have been carried out or are ongoing in Kenya, Tanzania, Panama, Zambia, the Congo and Indonesia.

A striking example of the economic value of Kenya’s forests is demonstrated by its “Water Towers” – mountains that are major sources of water for the country that benefit its economy. The Water Towers have a positive impact on Kenya’s economic resilience. While forest degradation in some of the Water Towers led to revenues from fuelwood of KSh 1,362 million in 2010 (about US$ 15 million), the overall negative effect of deforestation on the economy was estimated at KSh 3,652 million per year. This loss was attributed to changes in river flows, which reduced the provision of irrigation for agriculture and also affected hydropower and was worth more than 2.8 times the cash revenue of the deforestation. In other words, while the added-value of wood for fuel is accounted for by private companies and ultimately by the Kenyan government, it is equally important to reveal the costs that deforestation has in real terms. Such studies provide information to various government ministries in order to make more informed decisions about land-use.

The benefits of REDD+ go far beyond carbon sequestration. Forests and other ecosystems make valuable contributions to sustaining water-related ecosystem services, including by filtering and purifying water, stabilizing soil and reducing erosion, which in turn reduce the sedimentation of water courses. These benefits are essential not only for people living in the forest but also downstream, even in distant cities, which depend on the clean flow of water. Some 33 of the 105 largest cities around the globe (such as Rio de Janeiro, New Delhi, Nairobi and Jakarta) obtain a significant amount of their water from protected areas and forest watersheds that could be potential sites for REDD+ investments.

The UNEP World Conservation Monitoring Centre (UNEP-WCMC) is taking the lead to show the multiple benefits of REDD+ on different scales. In this way, UN-REDD Programme partner countries can enhance their understanding of what types of ecosystem benefits can be found in specific areas and how that overlaps with other types of planned land use like roads and cities.

Agriculture is the largest global driver of deforestation. Yet very long and complex supply chains often exist between the production of crops such as palm oil and soy or cattle-raising on pastures and the final products found on supermarket shelves.

A growing number of initiatives aim to “strip deforestation from supply chains,” whether from the productive or financial supply chain. This covers sources of debt, equity and other forms of capital, as well as financial services that lead directly or indirectly to deforestation. As part of the UN-REDD Programme, the UNEP Finance Initiative (FI) and the UNDP Green Commodities Programme are working in partnership to – for example – support the phase out of deforestation and forest degradation from productive and financial supply chains by identifying:

Implementing REDD+ will require a mix of policy instruments. The best policies for this can only be chosen following sound planning and active support from several interest groups, including the private sector. Policy instruments promoted under a Green Economy can include regulations such as new laws, clarity on land tenure and binding safeguards. Deforestation rates in the Brazilian Amazon for example substantially decreased during the second half of the 2000s, from a peak of 27,000 km2 in 2004 to 7,000 km2 in 2009. This can be explained in two ways. On the one hand, external factors such as falling agricultural prices may have inhibited the clearing of forest areas for the expansion of farmland. On the other hand, conservation policies introduced after two policy turning points, in 2004 and 2008, may have contributed to the curbing of deforestation.